Saturday, December 20, 2014

Binder & Binder Files For Bankruptcy

The Law Firm, Binder & Binder, a Long Island-based national Social Security Disability law firm had to
reduce institutional debt after payments from the federal government
slowed. The firm is dependent upon government-paid fees earned from shepherding Social Security Disability claimants through the system.The firm is
now facing a shrinking number of people seeking benefits and tougher
scrutiny from the Social Security Administration (SSA) Administrative Law Judges (ALJ) who decide cases.Binder& Binder has about 58,000
active cases or its 966 employees, many of whom aren’t lawyers. (In
2004, Congress made it easier for non-lawyers para-legals to represent applicants for Social Security disability benefits.)
In projections filed in court papers, Binder estimates its employee
head count will drop to less than 400 over the next two years.

Charles Binder began representing applicants for Social Security Disability Benefits with his brother, Larry, in the 1970s. In 2010, Binder & Binder scooped up $88 million in fees
representing applicants for Social Security Disability Benefits (SSI/SSDI). It was
the largest firm of its kind, thriving amid an aging workforce, high unemployment and less oversight than in the current environment.
On Thursday night, the firm filed for bankruptcy protection.The Wall Street Journal reports:

The firm listed assets and liabilities each between $10
million and $50 million in a bankruptcy petition filed in U.S.
Bankruptcy Court in White Plains, N.Y.
Those debts include $23 million in secured debt to lenders U.S. Bank
and Capital One Bank and $16.7 million in unsecured debt to Stellus
Capital Management, a spinoff of investment firm D.E. Shaw & Co.,
court filings show.
U.S. Bank and Capital One Bank are prepared to lend up to $26 million
in bankruptcy financing, filings show, subject to court approval.

The firm is dependent upon government-paid fees earned from shepherding Social Security disability claimants through the system.
The firm is
now facing a shrinking number of people seeking benefits and tougher
scrutiny from the Social Security Administration (SSA) Administrative Law Judges (ALJ) who decide cases.Binder& Binder has about 58,000
active cases or its 966 employees, many of whom aren’t lawyers. (In
2004, Congress made it easier for non-lawyers para-legals to represent applicants for Social Security disability benefits.)
In projections filed in court papers, Binder estimates its employee
head count will drop to less than 400 over the next two years.
U.S. Bank National Association and Capital One have agreed
to provide debtor-in-possession financing of up to $26 million,
the filings showed.The case is in the U.S. Bankruptcy Court Southern District
of New York, Case No: 14-23728.

The move will allow the firm to reduce institutional debt after
payments from the federal government slowed, hurting cash flow, said
Kenneth Rosen, an attorney with Lowenstein Sandler representing Binder
& Binder. The company listed both assets and liabilities of between
$10 million and $50 million, according to court papers filed in U.S.
Bankruptcy Court in the Southern District of New York.
"We have filed papers to pay our employees in the ordinary course. We
don't want the employees to feel anything; they will not. We don't want
the clients to feel anything; they will not," Mr. Rosen said. "The last
thing we would want is there to be any interruption. It's business as
usual."
U.S. Bank and Capital One made a $23 million secured loan to the
company. The financing will allow for operations to continue without
interruption, Mr. Rosen said.
The law firm, with about 57,000 clients, has approximately 900
employees in 13 states, including New York, where it has offices in
Manhattan, the Bronx, Long Island City and Hauppauge, L.I.
The
company's largest unsecured creditor was Houston-based Stellus Capital
Management, which had loaned the company $16.7 million. Google and
Manhattan-based Integrated Media Solutions were also among the firm's
largest creditors, with $800,000 and $2.7 million owed for services,
respectively.
Manhattan management consultant Development
Specialists will provide a chief restructuring officer to manage the
bankruptcy and improve operating performance, according to the filing.
Binder
& Binder was founded in 1975 by brothers Harry and Charles Binder.
Charles would appear in TV commercials, saying in the ads "You have
enough to worry about."

When reached for comment, while vacationing in Hungary Judge London Steverson, USALJ (Retired)

formerly of the Downey, California, Social Security Office Of Hearing And Appeals had this to say: "Wow! What a surprise.
I really like Manny Serpa, Esq. He usually represented Binder&Binder in cases that came before me. His cases were usually well prepared and he did a good job of presenting the merits of the claimant's case. And he won most of his cases. In 1990 the attorney would get an average fee of about $750 for winning a case, but they had to chase the client to get paid, because SSA did not withhold money and pay the attorney directly. Well, in 2009 when I retired the minimum fee was $2 thousand to $3 thousand per case, and the Government would hold back the money and pay the attorneys. Of course, some law firms would collect up to $28 thousand dollars in attorneys fees for a case with large amounts of past due benefits. It was a high volume business with rapid turnover. Even a para-legal could make $1 million dollars a year if he got enough referrals. I never did agree with the idea that para-legals should get paid at the same rate as lawyers, since para-legals do not have a law school education and are not members of the Bar. But, no one listened to me. http://www.amazon.com/socialNsecurity-Confessions-Social-Security-Judge/dp/1449569757
I just can't believe that a law firm specializing in Social Security benefits would ever go bankrupt. It's the easiest legal job in the world. The cases are all tried before a judge sitting alone without a jury and the other side is not represented. The lawyers are nothing more than baby-sitters for the claimants, and the judges ask all the questions at the Hearing. It is like losing an uncontested divorce; it never happens. That is why it is so astounding to hear that Binder&Binder is going bankrupt. There must be some other reason; possibly some kind of gross mismanagement, or some one might have been siphoning funds under the table. I'm not saying that that is a possibility, but this whole thing does not sound quite right to me. As we used to say in the Coast Guard "it will all come out in the wash". I wish old Manny Serpa well."

(Nathan Chapman, President of The Marketing Center,
sees opportunity for your practice in 2015 from Binder & Binder's
bankruptcy)

If you’re a Social Security Disability attorney, you don’t need anyone to tell you 2014 has been challenging.
On the other hand, if you think you had a bad year, at least you don’t owe $40 million.
According to news reports
at the end of last week, national disability advocacy firm Binder and
Binder “is preparing for a possible Chapter 11 bankruptcy filing… as it
faces roughly $40 million of debt and shrinking demand for its services
amid tightening government scrutiny of claims.”
Gee, it wasn’t so long ago The Wall Street Journal reported, “The $88
million the Binder firm collected in 2010 was more than triple the $26
million it got in 2006, according to data obtained under a Freedom of
Information Act request.”
We can trust that H.I.G. Private Equity, which bought a stake in
Binder & Binder in 2010, knows some good lawyers and accountants.
So, I don’t want to write today about the Goliaths. What’s it all mean
for the Davids of the Social Security Disability profession?

What We Heard in 2014…

I like to joke that at our specialized marketing agency for
disability attorneys, we talk to more disability lawyers than anyone in
America other than Barbara Silverstone. So what did we hear in 2014?
Well, a lot of pain and concern – starting with repercussions from the
October 2013 federal government shutdown. That resulted in claimant
files that didn’t get processed, hearings that didn’t get scheduled,
benefits that didn’t get awarded and, yes, legal fees that didn’t get
paid.
And then there were the horror stories of ALJs being coached and even
punished when they awarded benefits too often. We all cried, “Where is
the similar coaching for the judges who deny too many?”
I know of some Social Security attorneys who went into early
retirement in 2014. Others laid off staff. The Davids were getting hit
by some pretty large slingshot rocks.
Yet, not every conversation with a disability attorney in 2014 was
one of pain. While some attorneys may have gotten out, others called us
to get in: Yes, there are still attorneys wanting to enter the
disability arena, or if already there, to ramp up their practices.
Most significantly, I remember one particular conversation with a
disability attorney that was a message of hope. I repeated it often to
others. While commiserating about the problems of this era, this
attorney said to me: “The attorneys who are having the hardest times are
the ones who have been doing the same thing the same way for so long,
they are unable or unwilling to change. Those are the ones most in
trouble.”

Resolve to Evolve in 2015…

“…Unable or unwilling to change.” Those words linger in the air as we cross over into a new year.
At the Las Vegas NOSSCR Conference this year, we presented a
clients-only Internet-themed presentation entitled, “Evolve or Die.”
(Watch for it as a webinar early next year.)
Here are some ways that your disability law firm can consider changing:

Diversification. We
think you should consider diversifying your client base. In 2014, we
created new television and/or Internet marketing campaigns for LTD
cases, Veterans Disability, Workers’ Compensation, Bankruptcy, Special
Education, Employment Law and even Personal Injury for attorneys who
also represent Social Security claimants.

Improve your Website Conversion.
Much is written how SEO can help a Social Security Disability lawyer
rank higher in search engine results for increased traffic. We recommend
equal study, testing and improvements to help your law firm’s website
convert a greater percentage of the traffic into actual leads.

Paid Search. When
handled by pros and reinforced with branding efforts, a Paid Search
campaign be more cost efficient via better conversion than buying leads
that have no branding element to them.

Better Branding. If
you agree that not all attorneys are alike, shouldn’t they not look
alike? In 2014, The Marketing Center handled more logo and brand
refreshes than any other year in our history.

Initial Applications.
It’s more important than ever that your marketing messages urge
claimants to call when they need to apply, not just after being denied.
Then, resolve to get efficient in handling those applications.

Believe in yourself.
American history shows that in periods of economic panic and market
contractions, there are always some who use the retreat by others as an
opportunity to grow their brand while competition, in this case Binder
& Binder, is less active. Fortunately, at The Marketing Center,
we’ve had those conversations in 2014 as well.

For 2015, The Marketing Center’s clients have booked a greater amount
of marketing exposure than the year we leave behind. We see that as a
positive sign for all - one of hope, optimism and confidence.
Here’s hoping YOU have a prosperous new year. Of course, let us know if you’d like some help with that.

About Me

I am a thoroughly civilized, humane, cosmopolitan, polished, restrained, enjoyable, entertaining Info-maniac. I am a staunch exponent of individual dignity, freedom, equal access to legal services, and equal protection of the law. Here I hope to demonstrate my emotional restraint, humbleness of sentiment, psychological subtlety, lucid style, and simple language, without evading political reality or eternal truth. Daily I am excited that I have the right to create the beginning of a new self and to challenge old habits and attitudes I no longer choose to accept. I choose to relax in the present with my direction firmly in mind. I have an enormous capacity for creative and clever ideas and thoughts. It is phenomenal what I can do. I am capable of so much learning and absorbing a lot of information. My potential is a source of pleasant surprise for me.
Each day, I increase in knowledge, skills, strength, faith, and abilities.With each adventure, the boundary hemming in my potential expands easily to accomodate my growth and achievements.